Equilibrium Unemployment, General Human Capital Depreciation and Optimal Training Subsidy

Equilibrium Unemployment, General Human Capital Depreciation and Optimal Training Subsidy

We analyse the optimal subsidy scheme of continuous vocational training in general human capital, considering a frictional labor market with general human capital depreciation during unemployment spell. When matched with a worker, a firm does not ex ante observe whether the worker has up-to-date kno...

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Bibliographic Details
Published in:Revue d'économie politique Vol. 121; no. 2; pp. 209 - 231
Main Authors: Belan, Pascal, Cheron, Arnaud
Format: Journal Article
Language:French
Published: 01-03-2011
Subjects:
Economic models
Equilibrium
France
Labour market
Subsidies
Vocational education
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Summary:We analyse the optimal subsidy scheme of continuous vocational training in general human capital, considering a frictional labor market with general human capital depreciation during unemployment spell. When matched with a worker, a firm does not ex ante observe whether the worker has up-to-date knowledge or not. The model allows to identify two externalities; their respective correlations with the human capital depreciation rate have opposite signs. We then show that a rise in the depreciation rate during unemployment spell does not necessarily imply higher training subsidies. [PUB ABSTRACT] Reproduced by permission of Bibliothèque de Sciences Po
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ISSN:0373-2630
DOI:10.3917/redp.212.0209